KUALA LUMPUR: Property developer Talam Corp Bhd hopes to complete its financial restructuring within 12 months, said executive chairman Tan Sri Chan Ah Chye.
Part of the exercise involves negotiating with lenders to allow the company to pay construction fees before servicing its bank borrowings.
Prior to this, the bulk of progress billings was used to repay financiers, resulting in insufficient funds to pay contractors and suppliers, and delay in projects.
Yesterday, its biggest lender, which represented close to 70% of the total debts of RM1.2bil, signed a memorandum of understanding (MoU) pertaining to the new debt-settlement arrangement.
The MoU was signed on condition that a reputable contractor was appointed to provide guarantee on completion of projects of high quality and according to schedule.
IJM Construction Sdn Bhd had agreed to be the main contractor.
Both parties were expected to sign the settlement agreement, comprising the salient details, within one month, Chan told a press briefing yesterday.
He added that they were still in discussions on agreeable financial instruments to repay the lender.
“The financial aspect now is no longer a pressure. There will be no project in the Talam group that will be abandoned. They will be completed in one way or another,” he said.
Delays in completing projects, coupled with quality issues, had resulted in a net loss of RM513mil for the year ended Jan 31, 2006. During the period, Talam revenue dropped significantly to RM254mil from RM1bil in 2005.
Chan also attributed the delays to deportation of foreign workers and new Government policy on hillside development.
Presently, it has 12,000 properties under various projects in the Klang Valley that are still under construction. Talam was likely to complete half of them by year-end and the remaining by end-2007, he said.
Last year, some plots of its 10,000 acres were used to repay creditors, hence reducing its land bank to 6,000 acres, which are mainly in Selayang, Kota Damansara, Bukit Beruntung and Batang Berjuntai.
“We still have enough land to churn out some decent profits in the future. In these two years, we'll be talking about cleaning up and building public confidence,” Chan said.
He added that the company was moving away from being a volume player and towards becoming a niche property developer.